Reserve Bank clears IAG's Lumley takeover

Reserve Bank clears IAG's Lumley takeover

By Suze
Metherell

June 6 (BusinessDesk) - The Reserve Bank has
approved Insurance Australia Group to buy Wesfarmer’s
Lumley General Insurance unit, which would give New
Zealand’s biggest general insurer a boost to market
share.

New Zealand's Reserve Bank it was satisfied Lumley
will continue to meet licensing criteria under IAG
ownership, it said in a statement. The central bank's
sign-off was the final hurdle in the New Zealand regulatory
approval process, and IAG is now waiting on the Australian
Prudential Regulation Authority and the Federal Treasure to
allow the A$1.845 billion deal, which will add Wesfarmers’
WFI and Lumley Insurance brands to IAG stable which includes
NZI, AMI and State, the Australian insurer said
separately.

Last month, the Commerce Commission approved
the deal saying it was satisfied the transaction wouldn't
substantially lessen competition for personal and commercial
insurance products. The application was opposed by a variety
of organisations including rival insurer Suncorp, the
Insurance Brokers Association New Zealand, Multisure Risk
Managers, the Motor Trade Association, Bus and Coach
Association, the Rental Vehicle Association, and the
Collision Repairs Association. In February, Tower chairman
Michael Stiassny told shareholders there was a
“significant risk” from the proposed level of market
dominance.

The deal has previously been approved by the
Australian Consumer and Competition Commission and New
Zealand’s Overseas Investment Office.

IAG said it was
confident the deal would be completed by the end of the
month.

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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